Week 1: Technical Implementation and Setup

Topics Covered:

• Introduction to Financial Machine Learning
• Python Environment Setup
• Data Retrieval from WRDS, Yahoo Finance, FRED, etc.
• Basic Visualization of Financial Data

Key Resources and Links:

• Introduction to Financial Machine Learning:
  • Python for Finance (2025 Edition)
  • Financial AI Foundation
  • Note: If links are broken, use Perplexity.ai to search for "Introduction to Financial Machine Learning Python 2025"
• Development Environment:
  • Python Download
  • VS Code Download
  • Search "Python development environment setup 2025" on Perplexity.ai for latest best practices
• Data Sources:
  • WRDS Platform
  • Yahoo Finance
  • FRED Economic Data
  • SEC EDGAR
  • Search "financial data APIs 2025" for alternative sources

Setup Instructions:

• Python Environment Setup:
  • Install Python directly from python.org
  • Install VS Code and Python extension
  • Learn to use requirements.txt for package management
  • Key packages: pandas, numpy, matplotlib, yfinance, requests, pandas_datareader
• Data Management Setup:
  • Create organized directory structure for data storage
  • Set up both local and cloud storage (OneDrive/GitHub)
  • Implement version control for your code and data
  • Create backup procedures for critical data
• Data Source Access:
  • Configure WRDS access credentials
  • Set up yfinance for market data
  • Configure FRED API access
  • Create data download scripts with proper error handling
  • Implement data validation checks

Data Management Best Practices:

• Directory Structure:

  project/
  ├── data/
  │   ├── raw/         # Original, immutable data
  │   │   ├── market/  # Market data (WRDS, Yahoo)
  │   │   ├── macro/   # Economic data (FRED)
  │   │   └── sec/     # SEC filings
  │   ├── processed/   # Cleaned, transformed data
  │   └── backup/      # Regular backups
  ├── code/
  │   ├── download/    # Data retrieval scripts
  │   └── analysis/    # Analysis scripts
  └── results/         # Output and visualizations

• Data Handling Guidelines:
  • Always keep original data files unchanged
  • Document data sources and download dates
  • Implement automated backup procedures
  • Use consistent file naming conventions
  • Include data source metadata in downloads

Weekly Assignment

Tasks:

1. Environment Setup
   • Install Python 3.10 or later
   • Set up VS Code with Python extension
   • Configure Git integration
2. Package Setup
   • Install required packages
   • Test all imports
   • Document any installation issues
3. Project Structure
   • Create course project directory
   • Initialize Git repository
   • Create weekly subdirectories

Week 1 Exercise:

Complete these essential setup tasks:

• Environment Setup:
  • Install Python and VS Code
  • Create and test virtual environment
  • Install required packages via pip
• Data Management:
  • Set up project directory structure
  • Create data backup procedures
  • Write data download scripts for:
    • Stock data from Yahoo Finance
    • Economic indicators from FRED
    • Company data from WRDS
• Basic Analysis:
  • Download S&P 500 constituent data
  • Create backup copy
  • Generate simple price plots
  • Document your process

Common Setup Issues and Solutions:

• Python Installation:
  • Use Python 3.11+ for best compatibility
  • Add Python to system PATH
  • Test installation: python --version
• Package Management:
  • Create requirements.txt file
  • Use pip install -r requirements.txt
  • Document package versions
• Data Access:
  • Test connections before bulk downloads
  • Implement timeout and retry logic
  • Verify data integrity after download